Is overconfidence poisoning your business?


The rise of narcissism and overconfidence is potentially putting the wrong people in top jobs. “Idiots and geniuses don’t differ much in the estimation of their abilities,” says top business psychology professor.

So well received was Dr Tomas Chamorro-Premuzic talk at the AHRI National Convention last year that he’s been invited back. The theme then was overconfidence in business and its potentially destructive impact. Premuzic has been arguing for some years that the rise of narcissism and the overestimation of our abilities is putting the wrong people in the top jobs.

Premuzic, a Professor of Business Psychology at University College London (UCL) and Visiting Professor at New York University, is an international authority in personality profiling and psychometric testing. Some of his research findings are counter-intuitive. They show that a less-confident person is likely to be more successful in business settings than someone who is overconfident. What is the reason for that?

The consequences of most traffic accidents are caused by overconfident drivers. Most incidents of cheating are the result of overconfident individuals who thought they could get away with it. The same applies to financial gambling and individuals who have played fast and loose with other people’s money,” explains Premuzic.

It turns out that having a high opinion of oneself is not uncommon. “Generally people think that they are more skilled, more good looking and more clever than they actually are. Idiots and geniuses don’t differ very much in the estimation of their abilities,” he says. Society tends to glamorise entrepreneurs, he says. Many of Premuzic’s students for example, tell him that they don’t want to go and work for so and so, they want to start their own business. “Yet their chance of success is very slim, only five per cent. Yet they have overconfidence in their abilities.”

Strong language

Although the foolish, self-regarding neighbour might be an annoyance, the alpha overachievers with Teflon-coated self belief at the helm of a major corporation are more of a problem. In a position to exert enormous power and influence, not only are millions of dollars at stake, but so too the future of employees.

Premuzic reels off a list of some notorious narcissists of recent times whose infallible sense of self only makes their fall from grace more keenly anticipated. Think of Donald Trump, Tony Blair, Sepp Blatter, Gina Reinhardt. How many of them would agree with the maxim that if you think you are great, you can achieve anything?

Premuzic believes that in workplaces, self-confidence has become confused with competence. “It’s impossible to talk about weaknesses in business anymore. Instead, they have become ‘developmental opportunities’. Some US companies have already eliminated negative thinking and vocabulary from assessments.” Added to this is the self-help industry, which has hijacked leadership development, says Premuzic. “It’s marketed as making people feel good about themselves even though it achieves the opposite. In reality, the whole self-help industry is mostly having no effect at all.”

Even though more and more money is being spent on leadership development, people’s confidence in leadership has been going down he says.  Working as a consultant over the past 15 years, Premuzic has witnessed how major corporations can become handicapped by what he calls the “toxic assets of personalities.” These are highly functioning people whose overconfidence might have advantages in the short term, but who are trapped in what he calls an “optimistic bias” that makes them receptive to positive feedback while ignoring the negative.

“Low self-confidence may turn you into a pessimist, but when pessimism teams up with ambition, it often produces outstanding performance. To be the very best at anything, you need to be your harshest critic, and that is almost impossible when your starting point is overconfidence,” he says.

Characterising the derailers most likely to be found among dysfunctional corporate managers, Premuzic describes the first as mischievous, a Machiavellian manager, who takes advantage of people and situations. Second, is the colourful, histrionic and thirdly the bold, vain and entitled figure. One thing they have in common is that, on the whole, they tend to be male.

Women are often more insecure and don’t advertise themselves, observes Premuzic. “Most decision-makers think this is a problem. But why is it a problem to question oneself and have some self-doubts? Take a look at the banking crises of recent years and perhaps we need more people who are less risk-taking in leadership roles. The assumption is that it’s good to put yourself forward, to think of yourself highly. But it’s exactly the other way round.”

The dark side of social media

Where do the roots of this overconfidence in society begin? Have we always been so self-regarding – or has the advent of social media amplified it?

Premuzic thinks that it’s a trend particularly noticeable among Gen Yers and millennials, which begs the question: Can we blame their boomer parents – or even the grandparents?

“Over-protective parenting is one factor. When societies prosper, there’s not just economical investment, but emotional investment. If things are easier for young people, it’s bad in another sense because the gap grows between aspirations and work ethic.”

Social media is making this worse, he believes. “Social media is like throwing gasoline to the fire. Everyone has a presence online and it creates a kind of neurotic narcissism whereby people need feedback and reassurance to reinforce themselves.”

Although we live in a world that worships those who worship themselves – from Donald Trump to Lady Gaga to the latest reality TV ‘star’ – nevertheless, when employees see that arrogance in their bosses, they react badly.

“According to Gallup, over 60 per cent of employees either dislike or hate their jobs, and the most common reason is that they have narcissistic bosses,” says Premuzic. Disengagement at work in the US is costing $300 billion in lost productivity each year. “If managers were less arrogant, fewer employees would be spending their working hours on Facebook, productivity rates would go up, and turnover rates would go down.”

Lower self-confidence reduces not only the chances of arrogance, but also of being deluded. Indeed, people with low self-confidence are more likely to admit their mistakes – instead of blaming others – and rarely take credit for others’ accomplishments, says Premuzic.

Lessons in humility

Trying to tell someone whose self-belief is sky high that they’ve got it wrong sounds difficult, but Premuzic says retraining decision-makers can be done so that they become aware of the negative consequences of confidence.

“Valuing humility and modesty and promoting people on actual competency has tangible business benefits,” he says. “Through coaching, leaders can be taught how to inhibit certain behaviours at critical moments and to accept negative feedback.”

As someone who has had to burst the balloon of many an egotist, how does he rate his own self-confidence on a scale of one to 10? “I’m a seven,” he insists. “It used to be higher. I’d go into a lecture theatre and think I was great. Now I’m not as happy with myself as I was before, but I think the end product is better.

“You have to ask, what is your priority? Is it to feel good about yourself or do you want to keep improving? It may hurt, but it will help you more. It’s like that ugly Christmas jumper that your grandmother knits for you that you have to wear. It’s itchy, embarrassing, but it teaches you to be a better person.”

Dr Tomas Chamorro-Premuzic will be a keynote speaker at the AHRI National Convention from 3 to 5 August 2016 in Brisbane. To check event details and to register, click here

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1 Comment On "Is overconfidence poisoning your business?"

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Tony

Oh yeah!

It’s the article I’ve been waiting for – finally arrived – out of the box for all to read.
Good one Amanda, and many thanks to Dr Tomas Chamorro-Premuzic for the insight.

More on HRM

Is overconfidence poisoning your business?


The rise of narcissism and overconfidence is potentially putting the wrong people in top jobs. “Idiots and geniuses don’t differ much in the estimation of their abilities,” says top business psychology professor.

So well received was Dr Tomas Chamorro-Premuzic talk at the AHRI National Convention last year that he’s been invited back. The theme then was overconfidence in business and its potentially destructive impact. Premuzic has been arguing for some years that the rise of narcissism and the overestimation of our abilities is putting the wrong people in the top jobs.

Premuzic, a Professor of Business Psychology at University College London (UCL) and Visiting Professor at New York University, is an international authority in personality profiling and psychometric testing. Some of his research findings are counter-intuitive. They show that a less-confident person is likely to be more successful in business settings than someone who is overconfident. What is the reason for that?

The consequences of most traffic accidents are caused by overconfident drivers. Most incidents of cheating are the result of overconfident individuals who thought they could get away with it. The same applies to financial gambling and individuals who have played fast and loose with other people’s money,” explains Premuzic.

It turns out that having a high opinion of oneself is not uncommon. “Generally people think that they are more skilled, more good looking and more clever than they actually are. Idiots and geniuses don’t differ very much in the estimation of their abilities,” he says. Society tends to glamorise entrepreneurs, he says. Many of Premuzic’s students for example, tell him that they don’t want to go and work for so and so, they want to start their own business. “Yet their chance of success is very slim, only five per cent. Yet they have overconfidence in their abilities.”

Strong language

Although the foolish, self-regarding neighbour might be an annoyance, the alpha overachievers with Teflon-coated self belief at the helm of a major corporation are more of a problem. In a position to exert enormous power and influence, not only are millions of dollars at stake, but so too the future of employees.

Premuzic reels off a list of some notorious narcissists of recent times whose infallible sense of self only makes their fall from grace more keenly anticipated. Think of Donald Trump, Tony Blair, Sepp Blatter, Gina Reinhardt. How many of them would agree with the maxim that if you think you are great, you can achieve anything?

Premuzic believes that in workplaces, self-confidence has become confused with competence. “It’s impossible to talk about weaknesses in business anymore. Instead, they have become ‘developmental opportunities’. Some US companies have already eliminated negative thinking and vocabulary from assessments.” Added to this is the self-help industry, which has hijacked leadership development, says Premuzic. “It’s marketed as making people feel good about themselves even though it achieves the opposite. In reality, the whole self-help industry is mostly having no effect at all.”

Even though more and more money is being spent on leadership development, people’s confidence in leadership has been going down he says.  Working as a consultant over the past 15 years, Premuzic has witnessed how major corporations can become handicapped by what he calls the “toxic assets of personalities.” These are highly functioning people whose overconfidence might have advantages in the short term, but who are trapped in what he calls an “optimistic bias” that makes them receptive to positive feedback while ignoring the negative.

“Low self-confidence may turn you into a pessimist, but when pessimism teams up with ambition, it often produces outstanding performance. To be the very best at anything, you need to be your harshest critic, and that is almost impossible when your starting point is overconfidence,” he says.

Characterising the derailers most likely to be found among dysfunctional corporate managers, Premuzic describes the first as mischievous, a Machiavellian manager, who takes advantage of people and situations. Second, is the colourful, histrionic and thirdly the bold, vain and entitled figure. One thing they have in common is that, on the whole, they tend to be male.

Women are often more insecure and don’t advertise themselves, observes Premuzic. “Most decision-makers think this is a problem. But why is it a problem to question oneself and have some self-doubts? Take a look at the banking crises of recent years and perhaps we need more people who are less risk-taking in leadership roles. The assumption is that it’s good to put yourself forward, to think of yourself highly. But it’s exactly the other way round.”

The dark side of social media

Where do the roots of this overconfidence in society begin? Have we always been so self-regarding – or has the advent of social media amplified it?

Premuzic thinks that it’s a trend particularly noticeable among Gen Yers and millennials, which begs the question: Can we blame their boomer parents – or even the grandparents?

“Over-protective parenting is one factor. When societies prosper, there’s not just economical investment, but emotional investment. If things are easier for young people, it’s bad in another sense because the gap grows between aspirations and work ethic.”

Social media is making this worse, he believes. “Social media is like throwing gasoline to the fire. Everyone has a presence online and it creates a kind of neurotic narcissism whereby people need feedback and reassurance to reinforce themselves.”

Although we live in a world that worships those who worship themselves – from Donald Trump to Lady Gaga to the latest reality TV ‘star’ – nevertheless, when employees see that arrogance in their bosses, they react badly.

“According to Gallup, over 60 per cent of employees either dislike or hate their jobs, and the most common reason is that they have narcissistic bosses,” says Premuzic. Disengagement at work in the US is costing $300 billion in lost productivity each year. “If managers were less arrogant, fewer employees would be spending their working hours on Facebook, productivity rates would go up, and turnover rates would go down.”

Lower self-confidence reduces not only the chances of arrogance, but also of being deluded. Indeed, people with low self-confidence are more likely to admit their mistakes – instead of blaming others – and rarely take credit for others’ accomplishments, says Premuzic.

Lessons in humility

Trying to tell someone whose self-belief is sky high that they’ve got it wrong sounds difficult, but Premuzic says retraining decision-makers can be done so that they become aware of the negative consequences of confidence.

“Valuing humility and modesty and promoting people on actual competency has tangible business benefits,” he says. “Through coaching, leaders can be taught how to inhibit certain behaviours at critical moments and to accept negative feedback.”

As someone who has had to burst the balloon of many an egotist, how does he rate his own self-confidence on a scale of one to 10? “I’m a seven,” he insists. “It used to be higher. I’d go into a lecture theatre and think I was great. Now I’m not as happy with myself as I was before, but I think the end product is better.

“You have to ask, what is your priority? Is it to feel good about yourself or do you want to keep improving? It may hurt, but it will help you more. It’s like that ugly Christmas jumper that your grandmother knits for you that you have to wear. It’s itchy, embarrassing, but it teaches you to be a better person.”

Dr Tomas Chamorro-Premuzic will be a keynote speaker at the AHRI National Convention from 3 to 5 August 2016 in Brisbane. To check event details and to register, click here

Leave a reply

1 Comment On "Is overconfidence poisoning your business?"

avatar
  Subscribe to receive comments  
Notify me of
Tony

Oh yeah!

It’s the article I’ve been waiting for – finally arrived – out of the box for all to read.
Good one Amanda, and many thanks to Dr Tomas Chamorro-Premuzic for the insight.

More on HRM